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Search Capital

Author

Listed:
  • Carlos Carrillo-Tudela

    (University of Essex, CEPR, CESifo and IZA)

  • Eric Smith

    (University of Essex, CESifo)

Abstract

This paper studies an environment in which workers accumulate information about employment contacts made while searching on-the-job. Workers use this search capital to improve wages and insure against job destruction. This behaviour generates voluntary and involuntary job-to-job transitions with both wage hikes and wage cuts. The equilibrium wage distribution becomes less disperse than when workers cannot recall previously met job opportunities. The impact on output depends on depreciation and the extent of on-the-job search, among other factors. If search capital does not depreciate too quickly, the insurance benefits outweigh rent seeking costs and total output is higher with search capital.

Suggested Citation

  • Carlos Carrillo-Tudela & Eric Smith, 2015. "Search Capital," Working Papers 2015-41, Peruvian Economic Association.
  • Handle: RePEc:apc:wpaper:2015-041
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Schwartz, J., 2015. "Optimal unemployment insurance: When search takes effort and money," Labour Economics, Elsevier, vol. 36(C), pages 1-17.
    2. Gutierrez, Italo A., 2016. "Job insecurity, unemployment insurance and on-the-job search. Evidence from older American workers," Labour Economics, Elsevier, vol. 41(C), pages 228-245.

    More about this item

    Keywords

    Search Capital; Turnover; Wage Cuts;

    JEL classification:

    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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